FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Qtr. Ended September 30,1996 File No.: 2-20954-NY
KBF POLLUTION MANAGEMENT, INC.
(Exact name of registrant as specified in its charter)
NEW YORK 11-2687588
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1110 FARMINGDALE ROAD NORTH LINDENHURST NEW YORK 11757
(Address of principal executive offices)
(516) 225-0007
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
--- ---
Indicate the number of shares outstanding of each of the registrant's classes of
stock as of September 30, 1996:
Common stock, $.00001 par value - 43,405,546 shares outstanding.
<PAGE>
KBF POLLUTION MANAGEMENT, INC.
FORM 10-Q
September 30, 1996
INDEX
PART I - FINANCIAL INFORMATION
Item I - FINANCIAL STATEMENTS (Unaudited)
Balance Sheets -
September 30, 1996 and December 31, 1995 3-4
Statement of Income -
Nine Months Ended September 30, 1996 and 1995 5
Three Months Ended September 30, 1996 and 1995 6
Statement of Cash Flows -
Nine Months Ended September 30, 1996 and 1995 7-8
Notes to Financial Statements 9
Item II - MANAGEMENT'S DISCUSSION AND ANALYSIS 10-11
PART II - OTHER INFORMATION 12
SIGNATURES 12
<PAGE>
KBF POLLUTION MANAGEMENT, INC.
FORM 10 - Q
SEPTEMBER 30, 1996
BALANCE SHEET
ASSETS
9/30/96 12/31/95
------- --------
Unaudited Audited
--------- -------
CURRENT ASSETS:
Cash $ 15,386 $ 11,025
Cash - Restricted 27,500 27,500
Trade Accounts Receivable (Net of
allowance for doubtful accounts
of $31,567 & $26,657) 284,106 186,648
Other Receivables 30,000 0
Inventories 16,773 13,369
Prepaid Expendable Supplies 18,993 18,993
Other Prepaid Expenses 16,284 29,697
---------- ----------
Total Current Assets 409,042 287,232
FIXED ASSETS:
Property, Equipment & Improvements
(Net of Accumulated Depreciation &
Amortization of $1,413,031 & $1,248,829) 1,073,537 1,205,621
Leased Property under Capital Leases
(Amortization of $417,533 & $369,881) 114,345 175,968
Non Expendable Stock, Parts & Drums 139,368 139,368
---------- ----------
Total Fixed Assets, Net 1,327,250 1,520,957
OTHER ASSETS:
Cash Surrender Value - OLI 0 8,957
Security Deposits 7,906 9,381
Patent (Net of Accumulated Amortization
of $9,669 & $8,772) 21,867 22,764
Capitalized Permit Costs 95,580 91,655
---------- ----------
Total Other Assets 125,353 132,757
---------- ----------
TOTAL ASSETS $1,861,645 $1,940,946
========== ==========
See accompanying notes to financial statements.
-3-
<PAGE>
KBF POLLUTION MANAGEMENT, INC.
FORM 10 - Q
SEPTEMBER 30, 1996
BALANCE SHEET
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
9/30/96 12/31/95
------- --------
Unaudited Audited
--------- -------
CURRENT LIABILITIES:
Accounts Payable - Trade $ 386,071 $ 335,419
Accrued Expenses 68,232 76,062
Taxes Withheld & Accrued 16,878 13,259
Current Portion of Long - Term
Debt 66,637 21,637
Current Portion of Capital Lease
Obligations 78,170 70,736
----------- -----------
Total Current Liabilities 615,988 517,113
LONG-TERM LIABILITIES:
Long - Term Lease Obligations 243,074 290,157
----------- -----------
Total Long - Term Liabilities 243,074 290,157
STOCKHOLDERS' EQUITY (DEFICIT) :
Com. Stock par value .00001 per sh
Authorized - 500,000,000 shares
Issued & Outstanding
September 30, 1996 - 43,405,546 434 423
Dec. 31, 1995 - 42,216,213
Capital in Excess of Par Value 4,332,734 4,201,061
Retained Earnings (Deficit) (3,330,585) (3,067,808)
----------- -----------
Total Stockholders' Equity (Deficit) 1,002,583 1,133,676
----------- -----------
TOTAL LIABILITIES
& STOCKHOLDERS' EQUITY (DEFICIT) $ 1,861,645 $ 1,940,946
=========== ===========
See accompanying notes to financial statements.
-4-
<PAGE>
KBF POLLUTION MANAGEMENT, INC.
FORM 10 - Q
SEPTEMBER 30, 1996
STATEMENT OF INCOME
(Unaudited)
NINE MONTHS ENDED
9/30/96 9/30/95
------- -------
REVENUES $ 1,453,899 $ 1,393,392
LESS: Cost of Operations 1,031,909 1,025,251
------------ ------------
Gross Profit 421,990 368,141
LESS: General & Admin. Expenses 667,613 594,613
Advertising 5,769 7,694
------------ ------------
Operating Income (Loss) (251,392) (234,166)
OTHER INCOME (EXPENSES):
Interest Income 786 797
Other Income 0 37,392
Interest Expense (9,566) (41,651)
Income Tax Provision (2,608) (2,002)
------------ ------------
NET INCOME (LOSS) $ (262,780) $ (239,630)
============ ============
Number of Shares Outstanding 43,405,546 41,816,213
Earnings Per Share from Operations $ (.0058) $ (.0056)
============ ============
Earnings Per Share - Net Income (Loss) $ (.0060) $ (.0057)
============ ============
See accompanying notes to financial statements.
-5-
<PAGE>
KBF POLLUTION MANAGEMENT, INC.
FORM 10 - Q
SEPTEMBER 30, 1996
STATEMENT OF INCOME
(Unaudited)
THREE MONTHS ENDED
9/30/96 9/30/95
------- -------
REVENUES $ 523,421 $ 477,897
LESS: Cost of Operations 365,090 365,804
------------ ------------
Gross Profit 158,331 112,093
LESS: General & Admin. Expenses 245,209 175,937
Advertising 3,346 1,991
------------ ------------
Operating Income (Loss) (90,224) (65,835)
OTHER INCOME (EXPENSES):
Interest Income 291 270
Other Income 0 17,392
Interest Expense (3,088) (10,760)
Income Tax Provision (600) (737)
------------ ------------
NET INCOME (LOSS) $ (93,621) $ (59,670)
============ ============
Number of Shares Outstanding 43,405,546 41,816,213
Earnings Per Share from Operations $ (.0020) $ (.0016)
============ ============
Earnings Per Share - Net Income (Loss) $ (.0022) $ (.0014)
============ ============
-6-
<PAGE>
KBF POLLUTION MANAGEMENT, INC.
FORM 10 - Q
SEPTEMBER 30, 1996
STATEMENT OF CASH FLOWS
(Unaudited)
NINE MONTHS ENDED
9/30/96 9/30/95
------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash Received from Customers $ 1,351,532 $ 1,339,448
Cash Paid to Suppliers & Employees (1,320,133) (1,347,041)
Interest & Dividends Received 786 797
Interest Paid (8,151) (37,286)
Income Taxes Paid (3,595) (4,215)
----------- -----------
Net Cash Provided (Used) by
Operating Activities 20,439 (48,297)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash Purchases of Equipment (18,148) (9,254)
Cash Purchases of Intangible &
Other Assets (3,925) 0
Cash Provided by Sale of Assets 0 8,033
Cash Provided by Surrender of Life Insurance 8,957 0
----------- -----------
Net Cash Provided (Used) in Investing
Activities (13,116) (1,221)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Sale of Stock &
Warrants 27,000 125,485
Proceeds from Debt 45,000 0
Payment of Underwriting Costs (35,315) 0
Repayment of Long-Term Debt &
Capital Lease Obligations (39,647) (79,152)
----------- -----------
Net Cash Provided (Used) by Financing
Activities (2,962) 46,333
----------- -----------
NET INCREASE (DECREASE) IN CASH 4,361 (3,185)
CASH at Beginning of Period 11,025 39,418
----------- -----------
CASH at End of Period $ 15,386 $ 36,233
=========== ===========
-7-
<PAGE>
KBF POLLUTION MANAGEMENT, INC.
FORM 10 - Q
SEPTEMBER 30, 1996
STATEMENT OF CASH FLOWS
(Unaudited)
NINE MONTHS ENDED
9/30/96 9/30/95
------- -------
RECONCILIATION OF NET INCOME TO NET
CASH FROM OPERATING ACTIVITIES:
NET INCOME (LOSS) $(262,780) $(239,630)
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Depreciation 211,855 222,997
Amortization 897 897
Consulting & Professional Fees Paid in Stock 140,000 (31,392)
Gain on Sale of Asset 0 (6,000)
Bad Debts 4,910 5,394
(Increase) Decrease in:
Trade Accounts Receivable (102,368) (53,944)
Inventories (3,404) 3,906
Prepaid Expenses & Deposits 14,888 33,187
Other Receivables (30,000) 0
Increase (Decrease) in:
Accounts Payable 50,652 41,074
Withholding Taxes Payable 3,619 549
Accrued Expenses (7,830) (25,335)
--------- ---------
$ 20,439 $ (48,297)
========= =========
Supplemental schedule of non-cash investing and financing activities:
Capital lease obligations incurred for the
lease of equipment $ 0 $ 484,945
========= =========
Common Stock issued for the repayment of
principal and interest on loan $ 0 $ 136,788
========= =========
Common Stock issued for payment to
venders $ 140,000 $ (31,392)
========= =========
-8-
<PAGE>
KBF POLLUTION MANAGEMENT, INC.
FORM 10-Q
SEPTEMBER 30, 1996
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 -BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for fair presentation have been included. Operating results for the
nine months ended September 30, 1996 are not necessarily indicative of the
results that may be expected for the year ended December 31, 1996. For further
information, refer to the financial statements and footnotes thereto included in
the Company's annual report on Form 10-K for the year ended December 31, 1995.
NOTE 2 - INVENTORIES
Inventories are comprised of the following major categories:
9/30/96 12/31/95
------- --------
Shipping Supplies $ 7,761 $ 4,770
Reagents 9,012 8,599
-------- --------
$ 16,773 $ 13,369
======== ========
-9-
<PAGE>
KBF POLLUTION MANAGEMENT, INC.
FORM 10-Q
SEPTEMBER 30, 1996
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL
STATEMENTS AND NOTES SET FORTH ELSEWHERE IN THIS REPORT.
RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1996
AS COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 1995
Total revenues for the nine months ended September 30, 1996 increased to
$1,453,899 as compared to $1,393,392 for the same period in 1995, an increase of
5%. The Company attributes such increase in revenues to the increased customer
base utilizing the Company's services.
Cost of sales for the nine months ended September 30, 1996 decreased to 71% of
revenues from 73% of revenues for the same period in 1995. Such decreases are
due to changes in the mix and constitution of the waste streams treated by the
Company and the related costs of their treatment. The decrease is also
reflective of management's aggressive cost reduction plans.
General and administrative expenses increased by 12% to $667,613 for the nine
months ended September 30, 1996 from $594,613 for 1995. This increase is
primarily due to an increase in the Company's sales and management personnel.
In June 1995, the Company filed for its patent on the "Selective Separation
Technology" which is used in the resource recovery of waste streams. This patent
is currently pending.
The Company incurred a net loss of -$262,780 for the first nine months of 1996,
a 9% increase from the net loss of -$239,630 for the same period in 1995, due to
the increase in sales and management personnel mentioned above.
LIQUIDITY AND CAPITAL RESOURCES
The Company believes that current operations will provide adequate cash flow to
meet current obligations. Previous types of financing and capital resources are
defined as follows:
In order to finance the costs incurred as the Company prepared for the issuance
of the 373(b) storage permit (required to store additional waste streams), the
Company initiated a private placement of 5,600,000 shares of common stock in May
1994, for an aggregate purchase price of $700,000, with a par value of $.00001
at $.125 per share. Attached to each of these units is one redeemable Class A
warrant. Each Class A warrant entitles the holder to purchase one share of
common stock and one redeemable Class B warrant during the one year period,
commencing with the offering date, with an exercise price of $.125. Each Class B
warrant entitles the holder to purchase one share of common stock during the two
year period commencing with the offering date, at a price of $.18. This offering
is closed. As of September 30, 1996 $107,000 was raised in conjunction with the
Class A warrants.
-10-
<PAGE>
KBF POLLUTION MANAGEMENT, INC.
FORM 10-Q
SEPTEMBER 30, 1996
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30,1996
AS COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30,1995
Total revenues for the three months ended September 30, increased to $523,421 as
compared to $477,897 for the same period in 1995, an increase of 9%. The Company
attributes such an increase in revenues due to the increased customer base
utilizing the Company's services. customers must exist.
Cost of sales for the three months ended September 30, 1996 decreased to 69% of
revenues from 76% of revenues for the same period in 1995. Such decreases are
due to the changes in the mix and constitution of the waste streams treated by
the Company and the related costs of their treatment. Along with this change,
the decrease is also reflective of management's aggressive cost reduction plan.
General and administrative expenses increased by 39% to $ 245,209 for the three
months ended September 30, 1996 from $175,937 for 1995. This change is primarily
due to the increase in the Company's sales and management personnel.
The Company incurred a net loss of -$93,621 for the third quarter of 1996, a 56%
increase from the net loss of -$59,670 for the same period in 1995, due to the
increase in costs mentioned above.
-11-
<PAGE>
KBF POLLUTION MANAGEMENT, INC.
FORM 10-Q
SEPTEMBER 30, 1996
PART II - OTHER INFORMATION
Item VI - Exhibits and Reports on Form 8-K
Exhibits No. Description
------------ -----------
27 Financial Data Schedule
Reports on Form 8-K for the nine months ended September
30,1996, there were no reports filed on Form 8-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
KBF POLLUTION MANAGEMENT, INC.
Dated: Nov. 7, 1996 /s/ LARRY KREISLER
----------------------------
LARRY KREISLER - PRESIDENT
Dated: Nov. 7, 1996 /s/ KATHI KREISLER
----------------------------
KATHI KREISLER SECRETARY/
TREASURER
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
unaudited financial statements dated September 30, 1996 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 42,886
<SECURITIES> 0
<RECEIVABLES> 345,673
<ALLOWANCES> (31,567)
<INVENTORY> 16,773
<CURRENT-ASSETS> 409,042
<PP&E> 3,157,814
<DEPRECIATION> (1,830,564)
<TOTAL-ASSETS> 1,861,645
<CURRENT-LIABILITIES> 615,988
<BONDS> 0
0
0
<COMMON> 434
<OTHER-SE> 1,002,149
<TOTAL-LIABILITY-AND-EQUITY> 1,861,645
<SALES> 1,453,899
<TOTAL-REVENUES> 1,453,899
<CGS> 1,031,909
<TOTAL-COSTS> 1,031,909
<OTHER-EXPENSES> 673,382
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,566
<INCOME-PRETAX> (260,172)
<INCOME-TAX> 2,608
<INCOME-CONTINUING> (262,780)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (262,780)
<EPS-PRIMARY> (.006)
<EPS-DILUTED> (.006)
</TABLE>
